Panama blinks on tax transparency

Panama and four other countries have committed to lift the veil on financial accounts held in their countries to make it easier for other governments to detect potential tax evasion facilitated through them.

The five countries — Panama, Bahrain, Lebanon, Nauru, and Vanuatu — signaled the reversal in a letter sent Monday to the Organization for Economic Cooperation and Development.

“We are now seeing an unstoppable movement toward information sharing, on the basis of a single common standard developed by the OECD and endorsed by the international community,” OECD Secretary-General Angel Gurría said on Wednesday, urging the countries that have taken this engagement to implement it. “Action must now speak louder than words,” he added.

The five countries agreed in principle to an automatic information exchange on financial accounts belonging to non-resident with the tax authorities in the account holders’ country of residence from 2018, according to an OECD spokesperson. The OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes has acted as the world’s guardian on tax transparency since 2000.

Until now, Panama and the other four countries had rejected calls for an automatic exchange of information, agreeing only to respond to information requests from other countries on a bilateral footing.

An OECD spokesperson said he didn’t know yet if the five countries will sign its benchmark global treaty on tax cooperation, the Convention on Mutual Administrative Assistance in Tax Matters, which has 94 signatories so far.